FIN_571 Final.docx - Results 28/30(93.33 FIN/571 Book...

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Results:28/30 (93.33%)FIN/571Book value:Is equivalent to market value for firms with fixed assets. Generally tends to exceed market value when fixed assets are included. Is based on historical cost.Is more of a financial than an accounting valuation. Is adjusted to market value whenever the market value exceeds the stated book value.The underlying assumption of the dividend growth model is that a stock is worth:An amount computed as the next annual dividend divided by the market rate of return.An amount computed as the next annual dividend divided by the required rate of return.The same amount to every investor regardless of their desired rate of return.The present value of the future income that the stock is expected to generate.The same amount as any other stock that pays the same current dividend and has the same required rate of return.Which one of the following is an example of a nondiversifiable risk?A poorly managed firm suddenly goes out of business due to lack of salesA well-managed firm reduces its work force and automates several jobsA key employee suddenly resigns and accepts employment with a key competitorA well-respected chairman of the Federal Reserve Bank suddenly resignsA well-respected president of a firm suddenly resignsAll else equal, the contribution margin must increase as:The variable cost per unit declines.Sales price per unit declines.
The fixed cost per unit declines.Both the sales price and variable cost per unit increase.The sales price minus the fixed cost per unit increases.The market price of a bond increases when the:Coupon rate decreases.Discount rate decreases.Par value decreases.Face value decreases.Coupon is paid annually rather than semiannually.Under the _______ method, the underwriter buys the securities for less than the offering price and accepts the risk of not selling the issue, while under the _______ method, the underwriter does not purchase the shares but merely acts as an agent.

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